On May 12, 2020, the IRS issued two notices granting relief related to flexible spending accounts. Based on these notices, PEBA is implementing the following changes to its flexible spending accounts.
Employees can make prospective mid-year changes to Medical Spending Accounts (MSAs), Limited-use Medical Spending Accounts (LMSAs) and Dependent Care Spending Accounts (DCSAs) without a qualifying change in status. The following changes will be allowed:
- Make a new election.
- Increase an election.
- Decrease or revoke an election.
The decrease cannot be greater than the amount that has already been reimbursed to the participant. To make a change, employees should complete an Active Notice of Election (NOE) form between June 1 and June 30, 2020. Indicate “COVID” at the top of the NOE as the change reason. PEBA must receive completed forms by June 30, 2020. The change will be effective July 1, 2020.
2019 DCSA claims
The claims period for 2019 DCSA claims is extended through December 31, 2020. This means DCSA participants can use their remaining 2019 funds for expenses they incur through December 31, 2020. It’s important to note that participants can claim an expense only once; they cannot claim the same expense for 2019 funds and 2020 funds.
MSA carryover for 2021
The MSA carryover amount will increase to $550. This means MSA participants can carry over up to $550 of unused 2020 funds into the 2021 plan year.